After more than six decades, India bids farewell to the Income-tax Act, 1961. On August 11, 2025, the Lok Sabha passed the Income-Tax (No. 2) Bill, 2025, marking the most sweeping tax reform in generations.

The Bill—shaped by 285 recommendations from the Parliamentary Select Committee led by MP Baijayant Panda—promises **S.I.M.P.L.E.** compliance: *Streamlined, Integrated, Minimized litigation, Practical, Learning-oriented, Efficient*.

Top 10 Highlights

1. Higher Basic Exemption – No tax up to ₹12 lakh income (₹12.75 lakh after standard deduction of ₹75,000).

2. New Slabs (FY 2025–26) –

   * ₹0–₹4L → Nil

   * ₹4–₹8L → 5%

   * ₹8–₹12L → 10%

   * ₹12–₹16L → 15%

   * ₹16–₹20L → 20%

   * ₹20–₹24L → 25%

   * Above ₹24L → 30%

3. Section 87A Rebate – Full rebate up to ₹60,000 for eligible taxpayers.

4. Sections Cut Down – From over 800 to **536 sections** across 23 chapters.

5. Unified “Tax Year” – Replaces “Previous Year” & “Assessment Year” confusion.

6. Faceless, Fully Digital Assessments – Appeals and assessments online only.

7. Refunds Even After Deadline – Restrictive refund clause dropped; belated returns eligible.

8. Nil-TDS Certificates – For individuals with no tax liability, including NRIs.

9. Property Tax Clarity – Standard 30% deduction; updated rules for vacant properties.

10. Inter-Corporate Dividend Deduction Restored – Avoids double taxation in layered companies.

Other Key Measures

* No penalty for late TDS filing.

* Tax relief on commuted pensions explicitly stated.

* MSME definitions aligned with the MSME Act, 2020.

* Stricter rules on anonymous donations to religious/charitable bodies.

* Redundant provisions like Fringe Benefit Tax removed.

Bottom line: This is not just a rate rejig—it’s a structural overhaul aimed at clarity, digital efficiency, and taxpayer rights. Implementation starts from FY 2025–26.